E-commerce giant eBay Inc. bowed down to investors pressure to split into two by spinning out its payments unit PayPal. The company said that its board has approved a plan to spin off PayPal and post separation, the two will operate as independent publicly-traded entities under two new CEOs.

While eBay will be run by the newly-appointed CEO Devin Wening, who is currently president (marketplace), PayPal will be headed by Dan Schulman, who joined eBay this year.

This comes amidst relentless pressure from activist investors such as Carl Icahn, who holds 2.15 per cent stake in eBay, to spin off PayPal. However, Pierre Omidyar, eBay founder and its largest shareholder with 8.37 per cent holding had rejected the demand, saying he had the support of some of the most active shareholders.

Omidyar had said as recently as February this year that after diligent consideration the management believes that PayPal and eBay are better together. However, he had added that in the future if its determined that this no longer holds true the firm may consider it.

eBay had acquired PayPal for $1.5 billion 12 years ago.

eBay had $9.9 billion in annualised revenues with 149 million active buyers as of June 30, while PayPal had 152 million active users and generated $7.2 billion revenues over the last twelve months. eBay had a 10 per cent annual revenue growth with 35 per cent margin while PayPal grew 19 per cent with 25 per cent margin.

In the deal, current eBay shareholders will get one share of the new firm for each share of eBay. PayPal employs half of eBay’s 35,000 employees.

The company said in a statement that the separation best positions each business to capitalise on growth opportunities and make the firms more agile and focused to bring targeted innovation. It also enables optimal capital structures to match the requirements of specific business units.

Besides its marketplace eBay also offers enterprise solutions to retailers and has brands such as ebay, StubHub, Magento, ebay enterprise and ebay classifieds. PayPal has brands such as Braintree, Venmo and PayPal Credit.

The tax-free spin-off for the shareholders is expected to be completed in the second half of 2015.